McNamee Hosea News & Press


Construction Advisor Newsletter, May 2013

Kevin M. Tracy

In the matter of SNC-Lavalin America, Inc. v. Alliant Techsystems, Inc., decided by the United States District Court for the Western District of Virginia, Roanoke Division, in 2011, a flooring subcontractor's claim for additional compensation was lost due to its failure to provide a formal written notice of changed conditions and demand for additional compensation, despite the parties' extensive discussions and research regarding the change in specifications.

The project related to the construction of a nitric and sulfuric acid concentration plant owned by the United States Army. The contract specifications required an epoxy floor that could withstand acid for four hours. After obtaining multiple samples and communicating with all available manufacturers, it was determined that an epoxy floor could not meet this requirement. The owner asked that alternatives be researched, and upon presentation of three different acid resistant concrete options, asked for pricing. Upon the choice of flooring being made, work ensued at the direction of the owner and general contractor despite the parties' inability to agree on a price for the change in flooring specifications. Despite the extensive research and communications between the parties over a period of months, the subcontractor never gave a formal notice of changed condition and demand for additional compensation.

The contract stated: "When Contractor becomes aware of a changed condition that may result in the increase or decrease in the Contract Price or Contract Time, Contractor shall promptly notify ATK of such circumstances. In no circumstances may such notice be provided more than 15 days from the date the Contractor becomes aware of the events giving rise to the changed condition. Failure to provide notice within the prescribed time period will serve as an absolute bar and complete waiver of Contractor's right to recover for any increases in the Contract Price or Contract Time resulting from the change."

The Court found this language to constitute an express condition precedent and denied the claim due to lack of notice despite the actual knowledge of the owner and general contractor in the changed condition, and their participation in determining the resolution. This case represents an extremely harsh result due to the fact that the subcontractor was not at fault for the requirement of the alternative flooring and that all parties were on actual notice of the change and the additional cost. This case represents an extreme example of the importance of knowing and fulfilling your contract obligations.